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Learning Objectives: ● Illustrate the importance of key business fundamentals to wealth generation ● Identify business stakeholders and their importance of non-profit organizations ● Explain how entrepreneurship is critical to the wealth of an economy ● State the 6 elements that make up business environment and explain why business environment is important to organizations ● Give examples of how the service sector has replaced manufacturing as the principal provider of jobs, but why manufacturing remains vital for Canada

Business Fundamentals LO1 ● Success in business is based on the strategy of finding a need and filling it, ie find goods and services ● Goods ○ Tangible products, such as food, clothing, medicine ● Services ○ are intangible products you cannot hold them, healthcare, education, insurance ● Although wealth is not a primary goal one result of successfully filling a market need is that you can make money for yourself ○ Business is an activity that seeks to provide goods and services to others while operating at a profit ○ Entrepreneur is a person who risks time and money to start and manage a business ■ They realize an organization needs competent employees ■ Need to borrow money and learn about the business Revenues, Profits and Losses ● Revenue is the total amount of money received during a given period for goods sold and services rendered from other financial sources ● Profit is the amount of money a business earns above and beyond what it spends for salaries and other expenses ○ Since not everyone makes a profit can be risky starting up a business ● A loss occurs when a business expenses outweigh their revenues ○ Most businesses enter a loss and will have to close their doors, which is why most businesses enter and exit the market place ○ Even though they are not failures they are considered exits ○ 2016 report indicated that a decrease in approx. 4,800 small business in Canada ○ Only a small portion of business that exit file for bankruptcy Matching Risk With Profit ● Risk refers to the chance of loss, the degree of profitability of loss and the amount of possible loss ● Risk is the chance a entrepreneur takes of losing time and money on a business that may not be profitable

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Companies that take high risks generally generate high profit ○ For example rassling a new car ■ Elon Musk empierced both successes and failures with the cars he releases Magnitudes of risk are different for each person you must evaluate the risks vs potential rewards before starting a business

Standard of Living and Quality of Life ● A country's business are integral In improving the quality of life for everyone in the country ○ Ie: Taxes which get put back into the company ● Standard of Living: Refers to the amount of goods and services people can buy with the money they have ○ Cost of goods vary between countries because of: ■ Taxes ■ Government regulations ● Quality of life: Refers to the general well being of a society in terms of its political freedom, natural environment, healthcare, safety, rewards to add satisfaction to other goods and services and education Responding to the various Business Stakeholders ● Stakeholders: All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address. ○

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Stakeholders can have direct and indirect impacts on an organization ■ Primary: Without them the business would not exist ■ Secondary: Influences do not affect the survival of the business Businesses can also influence government policies through activities and efforts of their associations ○ To succeed in the 20th century businesses need to balance the needs of stakeholders ■ Ignore the media they attack you and it hurts sales ■ Oppose the local community and it can effect you from expanding ○ Offshoring entails sourcing part of the purchased inputs outside of the country ○ Offsourcing means contracting with other companies to do some or all of the functions of a firm ■ Changes in offshoring may be, but are not necessarily, related to changes in outsourcing ■ Involve decisions both to purchase outside the firm and to do so from abroad ■ Interests in outsourcing arises because it may foretell changes in industrial structure ■ Interest in offshoring arises because it may signify changes in international trading patterns

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A recent study indicates that outsourcing will continue to grow at 12 to 16 % across functions such as legal, HR and informational tech ■ Governments may make legislation to reduce outsourcing Insourcing initaves occur when you bring jobs to companies, or assign specific jobs that would have otherwise been done outside to members inside the company Before companies do anything they must first weigh the consequences actions may have on shareholders or government policies such as funding and healthcare

Using Business Principles In Non-Profit Organizations ● Despite their efforts to satisfy all of their stakeholders, businesses cannot do everything to make a community good that is where non-profit organizations come in ● Non Profit Organization: is an Organization whose goals do not include making a personal profit for its owners ○ Strive to make as much money as possible but instead of shareholder or personal profit are put towards social or educational goals ○ Despite this they are still involved with business decisions ● Important to have a full understanding of management, leadership, marketing and financial management to start, run, or work in a non for profit organization

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Entrepreneurship Versus Working For Others Two ways of succeeding in business: ○ Working for Others ■ Safest way because you do not assume entrepreneurial risk ■ Paid Benefits ○ Starting your own business ■ Face all the entrepreneurial risk ■ You don’t receive paid benefits you have to pay for them yourself ■ To be successful you need to study others and find something you are passionate about ■ Ron Joyce ■ Purchased DQ Outlet in ‘63 and invested 10,000 dollars to become the first franchise of Tim Hortons ■ Took over the chain after Horton passed and continued to develop the business ■ Must constantly put in the work to develop your products ■ FOX 40 whistle products in 30 years sells neck gaiters, safety kits, amongst whistles

The Importance of Entrepreneurs to the Creation of Wealth ● Factors of production are 5 factors that contribute to a countries wealth they are ○ Land ■ Land and other natural resources

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Labor ■ People have always been an important resource in producing goods and services ○ Capital Goods ■ Equipment, machines, tools or buildings that help the production of goods ○ Entrepreneurship ■ The willingness to take a risk and start a business ○ Knowledge ■ Be able to use resources and information effectively by making business decisions Two most important ones are Entrepreneurship and Knowledge ○ Entrepreneurs take the risk to start their business and then use what they have learned to grow their business and increase wealth Business environment either encourages or discourages entrepreneurship helps explain the difference in rich vs poor locations Business can not normally control their environment The Business Environment

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The Business environment consists of the surrounding factors that either help or hinder the development of businesses

The Legal Environment ● Entrepreneurs want to minimize the risk of losing their money and make decisions based on government laws and acts ● agency's write regulations to interpret the law in more detail ● Regulations consist of restrictions that provincial and federal laws place on businesses with respect to the conduct of their activities ○ Laws Affect Business ■ Business need to be aware of laws that can affect their operations ■ Tax Laws ■ How much money they have to pay ■ Looking for a high ROI and must know how much they have to surrender to the government ■ Contract Laws ■ Business are given the option by laws to write contracts that are enforceable in court ■ Elimination of Corruption ■ Anti fraud and corruption laws ○ Capitalist system relies on honesty, integrity and ethics ■ Failure to adhere to these can weaken the whole system ■ E.g. stock market crash of 2008-2009 mortgage values were inflated and people took advantage of the system screwing it ○ Governments from various countries can work together to minimize this

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Ex: UN's sustainable development goal's (SDGs)

The Economic Environment ● Income and Expenditures ○ Must manage and monitor consumer spending, employment levels and productivity to make informed decisions on how to run a organization ● Currency shifts ○ Causes people to shift their business overseas to areas with more stable currencies ○ If your currency is whack no one will do business with you ■ High currency no one will import or export with you ■ Low dollar business with you becomes more attractive (cheaper to the consumer) ● Degree of Entrepreneurship ○ Some countries allow private owned businesses while others have businesses regulated by the government ● Economic systems The Competitive Environment ● Components of competition ○ Entry ■ When considering competition a firm must assess the likelihood of new entrants ■ Barriers to Entry: Refer to business practices that make it difficult for new firms to enter the market ■ Can be in the form of Capital Requirements ■ Distribution access ○ Powers of Buyers and Suppliers ■ Power to buyers occurs when there is very little of a product, low switching costs or the product represents a significant share of the buyers total cost ■ Allow them to exert significant pressure for price competition ■ Power to suppliers occurs when the product is critical to the buyer and when it has built up switching costs ■ Depends on Sacristy ○ Existing Competitors and substitutes ■ Competitive pressure amongst firms is essential for growth ■ In slow growth settings the pressure is more heated for any gains in market share ■ High fixed costs also create competitive pressures for firms to fill production capacity ● Customer driven ○ Businesses must win over customers to succeed ○ Be customer driven not manager driven, they need to focus on the needs for the

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customers not necessary what is always right for them right then ■ Fighting For Air Space: Chinook Helicopters LTD ■ Need to compete with changes in tech such as self flying planes etc ■ Need to keep up to date on domestic and international standards Organization structure ○ To improve customer relations must empower the front line workers who directly interact with the consumers ■ Empowerment: Giving Front Line workers the reasonability, authority and freedom to respond quickly to customer requests

The Social Environment ● Diversity ○ In the last 10 years Canada has welcomed close to 2.7 million permanent residents. ○ High flow of immigrants and slow rates of births explains why the Canadian population has been increasing since the 1990s ○ Citizenship immigration Canada aims to admit approx. 250,000 immigrants each year ■ In order to meet this target the government admits specific people under specific qualifications ■ Ex. The skilled worker, skilled trade and business immigrant account for 62% of the total immigration ■ The remaining 38% come through family or humanitarian categories ●

Demographic Changes ○ Demography is the statistical study of the human population with regard to its size, density and other characteristics such as age, race and gender ○ By understanding demographics you can target specific groups with advertisements ■ Aging Population ■ More people are living long ■ But the number of young people entering the workforce or contributing to society is shrinking because of a severe drop in birth rates since the mid 60s ■ Gen X: represents a demographic age group that were born in the period 1965-1976 ■ GenY Represents millennials who were born from 19771994 and are the children of Baby Boomers ■ Generation Z: who include people born from 1995 onward ■ According to statistics Canada seniors will become more numerous than children sometime around 2021 ■ Ages 20-34 and 35-64 are declining

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Workforce Change: Demographics explain what goods will be in demand in five years ■ Ex. Think of the products and services that middle aged and elderly people will need- anything from travel and recreation to medicine, nursing homes, assisted-living facilities ■ Don’t rule out computer games ■ And Baby boomers and their kids, the more people who target these demographics will see huge growths in the coming year Family Changes

The Technological Environment ● New Technologies have made drastic changes to many aspects of the world politics, medicine, business ○ Information and Technology ■ Technology means everything from phones and copiers to computers and other mobile devices ■ These products have boosted effectiveness and efficiency ■ Effectiveness means producing the desired result ■ Efficiency means producing goods and services using the least resources ■ Productivity is the amount of output you generate given the amount of input, such as the number of hours you work the more you produce in any given period ■ By boosting productivity there is a less demand for workers and contributes to our labour shortage ■ In the years since 2007-2009 Companies have been hiring more freelance workers and temps who get paid less ■ Ex: Elance: Provides freelancers with jobs companies looking for contractors then they collect a 8.75% transaction fee from the company ○ Databases ■ Business Technologies can be used in a variety of ways by businesses to help customers Ex: The barcode scanner at a checkout counter, scans a barcode and inputs the data into a database ● Data Base: is a electronic storage file in which information is kept ○ Databases enable stores to carry on merch their population wants ○ Companies then share databases so they may make mini ad campaigns to target what you want ● Identity Theft: is the act of obtaining personal information about a person such as social insurance number and or credit card numbers and using them for illegal activates ○ In response to this federal privacy laws have been created (PIPEDA) The Personal information Protection and Electronic Documents Act

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The Internet ○ Two types of e-commerce transactions (B2B) (B2C) (There is also C2C but not sure if it’ll be relevant) ■ In 2013 Canadian businesses sold 136 billion in goods and services over the internet ■ Approx. 61% of the sales involved wholesale trade, manufacturing and retail trade ■ This increase was caused by more online shoppers (B2C) ■ Also important to the B2B market ■ IBM selling consulting services to a local bank ■ Websites creating new stores ■ E-Commerce should not be confused with E-Business ■ E-Business refers to any information system or application that empowers the business process Social Media Advertising: ○ Used for Crowdsourcing which helps businesses find solutions to problems by utilizing a large amount of people

The Global Environment: ● Surrounds all the other categories of business environment ● Two important changes are increase in free trade and global competition ○ World Trade or Globalization: has grown thanks to the development of efficient distribution systems such as the internet ○ World trade has helped better the lives of many countries ■ E.g. Lenovo a Chinese company bought IBMs PC unit and now they sell them everywhere ■ China is slowly climbing the world stage ● How global change effects you: ○ Students who are prepared for the market of tomorrow will succeed The Ecological Environment: ● Biggest issue to get the attention of the business world is Climate Change ○ Climate change is the movement of the temperature of the planet ip or down over time ○ Issue correlated with this is global warming ○ Many business have adapted the practice of "greening" which is saving energy and investing in the use of greener products to make the world more sustainable ■ Sustainability (Social) ■ Focus on the quality of human life ■ Sustainability (Economic) ■ Focus on creating a steady state economy

The Evolution of Canadian Business ● ●

Many managers and workers are losing their jobs in major manufacturing firms Businesses in Canada have become more productive and fewer workers are needed in industries that produce goods

Progress in the Agricultural and Manufacturing Industries ● Canada has seen a strong economic development since the 19th century, this is mainly because of the agricultural industry ● It paved the way providing foods and revolutionizing the farming industry by innovating equipment's and practices ● Technology has taken over the farming industry and because of this many smaller farmers are losing the competition to large farms run by machines ● These out of work farmers then go to factories ● Which employee them with jobs operating machines ● As more jobs go away other jobs elsewhere pop up making the loss to society minimal Canada’s Manufacturing Industry ● The goods producing sector includes ○ Manufacturing ■ Food ■ Beverage ■ Clothing ■ Chemical ■ Machinery ■ Wood ■ Petroleum and Coal Products ○ Construction ○ Utilities ○ Agriculture ○ Forestry ○ Fishing ○ Mining ○ Quarrying ○ Oil and Gas Industries ● This sector employees just under 10% of Canada's working population ● Tens of Thousands of Canadian Jobs were lost in the late 2000s ○ Rising cost of the dollar and increasing global competition ○ Despite this the manufacturing industry still remains a staple ■ Employs 1.8 Million Canadians and represented 10.5% of the workforce in 2012 ■ Generates 3.15 in economic spin off every for every 1.00 in manufacturing output ■ 45% of manufacturers and exporters foresee a 1 to 10 % rise in their workforce

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59% of manufacturers and exporters plan to increase research and development investments

Progress in Service Industries ● Canada's industries have changed from more goods related industries to more service related industries over time ● Growth in this sector was caused by ○ Technological Improvements ○ As large manufacturing companies seek to become more efficient they contract out an increasing number of services ○ Other firms expanded which provide traditional services that women would do at home, since many women have entered the workforce there is a demand for these types of services ● Jobs in the service sector are higher paying and will continue to grow rapidly

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Strategy for graduates is to remain flexible, find out where jobs are being created and move when appropriate The business environment consists of all uncontrivable and surrounding factors that either help or hinder the development of a businesses ○ Business normally cannot control their environment but they need to monitor it to adapt changes The Environments are linked to what happens in one may impact another ○ Ex: Fear of catching covid (Social) impacted the (economic and competitive) airline sales Businesses that create wealth and Jobs grow and prosper in a healthy environment, thus creating the right business environment is the foundation for quality of life....